Full details of the conditions for payment of a serious ill-health lump sum are in the Pensions Tax Manual. Prior to 16 September 2016 it was not possible to take a serious ill-health lump sum from the uncrystallised part of an arrangement if some benefits had previously crystallised. If the client has an arrangement which consists of both uncrystallised funds and crystallised drawdown funds, (since 16 September 2016) a serious ill-health lump sum payment can be paid in relation to the uncrystallised funds so long as the payment extinguishes all uncrystallised rights under the arrangement. Q: Is it possible to take a serious ill-health lump sum from a Drawdown plan?Ī: No, you can only take a serious ill-health lump sum from uncrystallised funds. The criteria for both options are covered in the Pensions Tax Manual. If the member’s prognosis is less than 12 months, the member could be entitled to a serious ill-health lump sum from their uncrystallised pot. Some scheme rules only allow early payment where the member is unable to continue in any occupation. However, check the scheme rules which may be more restrictive than this HMRC definition. HMRC rules allow early payment of benefits where the scheme administrator accepts qualified medical advice stating the member is physically or mentally incapable of continuing their current occupation as a result of injury, sickness, disease or disability and, as a result of their ill-health, they cease that occupation. Q: If a client is age 49 with terminal cancer and has been given a 2 year prognosis, can they take any pension benefits before age 55?Ī: Only where the member satisfies the ill-health criteria. Q: Is the Uncrystallised Funds Pension Lump Sum (UFPLS) option available to those below age 55 but who satisfy the ill-health criteria?Ī: Yes it is, confirmed in the HM Revenue & Customs Pensions Tax Manual.
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